According to CNBC, citing data from the World Bank, Iraq’s economy is expected to grow by 7.2% this year, more than twice the average growth rate in the Middle East.

Yet, the country has many hurdles to overcome, most notably, a brutal terrorist insurgency by the Islamic State (ISIS) that has ravaged much of northern and western Iraq.

Furthermore, oil prices are notably lower than they were in the first half of the decade. “Oil at $30 was devastating for a growing country like Iraq, especially coming down from above $100,” Shwan Taha, founder of Rabee Securities, a Baghdad brokerage firm, told CNBC.

But experts expect Iraq to fair better with lower oil prices than their OPEC peer Saudi Arabia, which has relied on high oil prices to support its domestic budget.

With current prices of oil at under $50 a barrel, “it is a good price to give a breather and also not to cause the population to be dependent on it,” Taha said.

The International Monetary Fund (IMF) has also given the country a $5.4 billion loan to boost economy stability, which could appeal to potential investors.

CNBC reports that Iraq’s debt is likely to fall below 79% of its gross domestic product this year and payment delays to international oil companies are expected to be cut from 220 days to 120 days.

For more on Middle Eastern economies, watch Fortune’s video:

For the moment, however, investors are wary of the country’s current instability -- Iraqi troops and Kurdish fighters are pushing into Mosul as part of an offensive to retake the key city from ISIS. Despite Iraq’s oil bounty and agricultural promises, experts predict it could take years for the country to bounce back.

“Although Iraq has the natural resources to meet some of the criteria for emerging market status, on others it is still quite far away. We think it could take a decade or more before this would become a real discussion,” Alan Cameron, London-based economist with Exotix Partners, told CNBC.

]]>http://fortune.com/2016/11/28/iraq-growing-economy-isis/feed/0Erbil oil refinerytparmar123What the Middle East Needs Now from Americahttp://fortune.com/2016/10/22/middle-east-isis-syria/
http://fortune.com/2016/10/22/middle-east-isis-syria/#respondSat, 22 Oct 2016 13:00:25 +0000http://fortune.com/?p=1836266]]>At pivotal moments in our history, America has courageously concluded that a central tenet of its foreign policy, conceived with the best intentions, simply isn't working. Hard though it's been for this proud and mighty nation to admit failure, trading a losing strategy for a fresh course has brought such triumphs as the Nixon-Kissinger pacts with China that isolated the Soviet Union and helped to end the Cold War.

Today, America faces just such a reckoning in the Middle East. Our objective is clear: halting the spread of terrorism that's headed for our shores, threatening mass murder in our suburban shopping malls, city tunnels, and crowded parks. With the Middle East in chaos--as though a raging desert sirocco is destroying all sense of order--the US should make a radical, historic shift in its outreach towards the Arab world.

Given the reluctance of America and its Western allies to launch a military offensive, it's impossible to know when peace will be restored. But right now, while the battles rage, the US can take decisive diplomatic steps to stem the poverty and despair that makes the Middle East a breeding ground for radical Islamic terrorism. America should forge alliances with a new generation of Arab leaders whose principal goal is improving the daily lives of their people. Providing jobs and raising hope among the region's impoverished youth is the best protection for the world's wealthy nations, from America, to Europe, to the Arabian Peninsula.

Once peace is restored, the US should take the lead in establishing a 21st century "Marshall Plan" of economic aid to durably lift living standards in the Middle East's poorest areas.

So what went wrong? For decades, the U.S. has pursued a misguided policy I'll call "embrace and abandon." It started with the "embrace:" recruiting and financing leaders who were blatantly autocratic, yet at the time qualified as America's allies. Then, the U.S. invariably exhorted these strongmen to champion revolutionary democratic reforms in the name of "nation building." Yet the newly-installed regimes owed their existence to denying freedoms that would rally dissidents to overthrow them. So the democratization America encouraged was doomed from the start.

Then came the "abandon." Time and time again, when the governments America had nurtured and praised faced resistance or rebellion, Washington deserted their leaders, citing the popular excuse that their repressive measures were enslaving their own people.

Supporting leaders when they kept the Middle East stable, then dumping them when they failed to adopt Western ideals, was a blueprint for disaster. And it's disaster that ensued. Many of those strongmen--from Mubarak in Egypt to Gaddafi in Libya--have fallen. Once dominated by repressive but stable nation-states, vast swaths of the Middle East are now borderless, a hodge-podge of territories controlled by warring factions that's a throwback to its tribal past.

The search for a solution to this chaos requires a clear understanding of how we got here in the first place.

For centuries, the Ottoman Empire had neutralized the historically rooted sectarian divisions within Islam. Those divisions stem from its ancient political legacy as a "caliphate," a religious state with united by military might, but with constantly shifting borders. Following the Ottoman collapse after World War I, European colonial powers assumed the role of regional administrator, and colluded to redraw boundaries (i.e. Sykes-Picot) in the Middle-East to create nation states that satisfied competing Western interests. Those newly-created nations, occupying territories defined by legal borders, ignored Arab history and tribal custom. Modern Western notions of distinct nations bound together by geography, language, self-determination or political ideals been relevant in the Arab world. To Arabs, tribe and religion always trump an imposed political structure, especially the Western-exported concept of the nation-state.

Following World War II, as European colonialism waned, the US assumed a more significant role in the Middle East. US foreign policy was driven primarily by oil interests, the protection of Israel and resistance to Soviet aggression. To prevent the region from dissolving in sectarian conflict, the US established a series of autocracies. The campaign included restoring the Shah of Iran to the throne after the democratically elected Mosaddegh regime nationalized oil fields, and supporting for the Baathist overthrow of the Qasim government in Iraq, which gave rise to Saddam Hussein.

Following the end of the Cold War, America's foreign policy gravitated toward nation building, and the widespread promotion of democracy and human rights abroad. However, an iron fisted policies the strongmen imposed to remain in power conflicted with the moral endeavor to curate democracy afar. Hence, America's crusade undermined its original goals by threatening the same autocratic regimes the US had helped establish.

As the leaders the West once championed are toppled one by one, the boot-prints of Western Power are clearly visible. Regimes once supported by the US have fallen, marking the failure of embrace and abandon. In Egypt, Mubarak was in, then deserted. In Iraq, Hussein was in, then deposed. In Libya, Gaddafi was in, then overthrown with US support. In Syria with Assad, it was the same scenario. The instability created by contradictory Western interests has invited far worse atrocities by the new regimes than the crimes perpetrated by the previous order. The massacres in Syria and Iraq are obvious, bitter examples.

Filling the void are a multitude of warring sectarian groups from ISIS to Syrian rebels. The factions each generally fight under their own flag of political Islam. The rise of Islamic factions battling for territory is a legacy of the Iranian revolution that established a state rooted in religion.

Now, nearly four decades old, the Revolutionary Guard's rise to power remains the catalyst for Islamic sectarian division today, releasing forces of fury once confined first by Ottoman rule and then by US dominance in the region. The threat to Arab nations and the West that ensued is the same as that led by the Ottomans: the spread of a radical Islamic caliphate based on religion, not country. In Iran, this is credo is championed by the Revolutionary Guard and an Ayatollah who lectures two billion Muslims that he is an infallible ruler directly responsible to God. US diplomats are faced with an impossible balancing act: limiting nuclear proliferation and, at the same time, firmly standing against the religious intolerance fanning Islamic terrorism.

The outbreak of these historically opposing forces, compounded by declining oil prices, is heightening the ferment.

The Arab World's best hope is the rise of a new generation in government. In the UAE, Qatar and Saudi Arabia, brilliant young leaders are crafting forward-looking policies to effectively forge a new Middle East. American foreign policy must persuade these bold visionaries to lean West rather than East. This endeavor will not simply benefit the nations they lead. It's the most effective strategy to safeguard America's interests. By supporting their anti-terrorism platforms abroad, America enhances its anti-terrorism policies at home.

Like Asian rulers who launched the Tiger Economies of the mid to late 20th century, these new Arab leaders are searching for policies aimed at economic and educational development. Those policies are designed to reduce internal tensions and secure their countries' rightful place in a future dominated by global trade. The fate of America's Middle Eastern allies, as well as its own foreign policy interests, hinges on these reform efforts. These leaders need and deserve active, engaged US support. Yet America's recent retreat from the region, following clumsy attempts at nation building, has destabilized and discouraged its allies.

Iran is supporting militias in Iraq, Syria and Yemen whose stated purpose is to eradicate Israel. That threat may create what has been a previously unthinkable alliance between our Gulf Cooperating Council partners and Israel. It's in the interest of all these allies, including Saudi Arabia, Egypt, Palestine, other GCC members, along with Israel, to join forces. That alliance would provide a countervailing balance to the Revolutionary Guard in Iran, the ISIS caliphate and the aggressive aspiration of Turkey, which is further fueled by a renewed Russian push.

The competition for a caliphate has more contestants than just Iran, including ISIS, of course, as well as Turkey, and the Muslim Brotherhood. As the US withdraws, Russia is taking its place as the non-Arab power player in the Middle East. The chill in US-Russia relations has left President Putin free to defy Washington. Without predictable US-support, our allies may have only one direction to turn as Russia capitalizes on every USA misstep in the region.

The emerging alliance between Putin and Turkey's Erdogan has evolved in perfect Kissingerian fashion; sovereign relationships can be as ephemeral as their counterparties' interests. And now that Russia and Turkey seem to have a growing relationship, a counterbalancing alignment needs to be crafted between the GCC and the Arab nations.

The Kingdom of Saudi Arabia has been our longest and strongest ally and, to many Westerners' amazement, it is impossible for the US to move against any hostile Islamic group anywhere in the world without Saudi support. Almost two billion Muslims look to Mecca and Medina as their spiritual heartland and challenging any faction of Islam without the support of its guardian, Saudi Arabia, would be foolhardy.

The Saudis are reliable defenders of the West's diverse interests in the region, and have been America's principal ally in the Middle East for more than seventy years. The confused notion that Saudi Arabia is synonymous with radical Islam is falsely based on the Western notion that "one size fits all." Fundamentalists supporting the Islamic State in the Kingdom violate the rule of law at home, and the Saudis' strong efforts to prevent the export of terrorism. Saudi senior leaders desire good relations with the West and see the Islamic State and Jihadist terrorism as threatening to their very rule. Through the safeguarding of the Holy Cities of Mecca and Medina, which remain open to tens of millions of foreign visitors and differing Islamic beliefs, the Kingdom has a unique window into the actions and motivations of radical fundamentalists who pass in and out of those always accessible cities. By sharing that intelligence, the Saudis greatly enhance America's security.

Like it or not, the military option most unpopular with America's voters and politicians may be its best. Bashar Assad may well be our only hope in fighting the various terrorist factions that are attempting to form an ISIS state. If America agrees that putting boots on the ground would be impractical and ineffective, then a self-governed "Syria State" must be the entity that reaches settlements with the various factions that are causing the mass migration of thousands of Syrians to Europe, the USA and elsewhere. The only solution is one that works with Russia and not against them. Our vacuum forced that hand, because we are no longer the lonesome superpower shaping Middle East foreign policy.

When the USA had a narrow set of interests during the Cold War era, acting prudently in favor of well-defined and communicated objectives, its actions were more effective. But as the objectives changed, and America attempted to democratize autocracies, the broadening of goals led to a corresponding weakening of results. A clear direction in the Middle East is imperative, not just to enhance Middle Eastern nation-state interests, but to protect US interests at home, as well as abroad.

America's nation-building exercise of the past twenty years was founded on self-contradictions that have tarnished US foreign credibility. The geopolitical framework for that policy has been "embrace and abandon," a formula that has caused frustration, confusion and concern to America's allies in the region and displaced many millions of young refugees.

As America rethinks its interests in the Middle East, its primary concern is the elimination of domestic terrorism. The path forward replaces fear with hope and poverty with prosperity. Once security in the Middle East is attained, including a negotiated peace between the Israelis and the Palestinians, the USA must respond with an "end-state" perspective to draw a comprehensive solution similar to the Marshall Plan. Going from promoting then dumping dictators to drawing a new manifesto for economic rebirth would mean that finally, the America is finally doing right in teeming, oil-rich desert lands where it did wrong for decades.

Thomas J. Barrack Jr. is an international private equity investor and the founder and executive chairman of Colony Capital. He is also foreign policy and economic advisor to GOP U.S. Presidential candidate Donald Trump. The views expressed in this article are his own and do not reflect the campaign.

]]>http://fortune.com/2016/10/22/middle-east-isis-syria/feed/0Damascus Syria 2016nt2192Decoding Trump’s Immigration Plan and What It Means for Employershttp://fortune.com/2016/08/17/trump-immigration-business/
http://fortune.com/2016/08/17/trump-immigration-business/#respondWed, 17 Aug 2016 13:00:57 +0000http://fortune.com/?p=1767945]]>Since the very first day of his campaign for the presidency, Donald Trump has made immigration a key part of his platform. Though early in the campaign he spoke of controlling immigration from Mexico, in recent months, Trump focused on Muslims, calling for a ban on Muslims entering the U.S.

Trump’s position has fluctuated (he went from calling for a “complete and total shutdown” to, at one point, calling the ban just “a suggestion”). In a foreign policy speech Monday, he gave a few more details yet on his immigration plan, which, in turn, raised questions about the potential impact on employers that rely on H classification visas, especially H1-B visas, to bring in skilled workers from overseas.

Below, Fortune attempts to calculate the impact.

What Trump proposed

In his speech, Trump advocated for at least a temporary ban from the “most dangerous and volatile” regions that have “a history of exporting terrorism.” He added that if elected, he’d have the government draw up a list of regions “where adequate screening cannot take place” and stop processing visas from those areas until it is “deemed safe.”

Trump didn’t name the countries or regions, but the speech was largely focused on radical Islam and the threat that Islamic terrorism represents. He also called for a new screening test–"extreme, extreme vetting," he said –which would keep out immigrants that don’t “embrace a tolerant” American society. But until then, he said, he would suspend immigration from countries rife with terrorists.

How businesses could be impacted

Given Trump’s frequent emphasis on controlling Muslim immigration (and the fact that he mentioned in this speech the danger of admitting refugees from Syria and other Middle East countries dealing with Islamic State terrorists), Fortune looked at the visas issued to citizens of Muslim-majority countries.

In 2015, there were 6,879 H classification visas given to citizens of these Muslim-majority nations, according to Department of State data. Though that is a relatively small percentage of the more than 477,000 H visas issued for the year, foreigners who come to the US on H visas are allowed to come to the US temporarily because they’re filling high-need jobs. Those coming on H-1B visas often are working specialized, STEM positions, which employers say they have special difficulty filling.

And what about India, and Europe?

Major terror attacks have happened in France, Germany, and Belgium, sometimes perpetuated by European citizens. Almost 4,000 H classification visas came from those three nations in 2015. Even more concerning for employers, nearly half of the H visas issued in 2015 went to Indian citizens. Though only 14% of the population is Muslim, the country has had its own struggles with Islamic extremism and terrorism.

If a Trump State Department decided that these countries presented too much of a screening challenge, the businesses that use H1B visas--including many tech companies--could be hit hard. More two-third–68%–of human resources professionals say they are having trouble filling jobs, especially in STEM fields, according to Rebecca Peters, the director for government affairs at the Council for Global Immigration, part of the Society of Human Resource Management.

Jeremy Robbins, the executive director of the Partnership for a New American Economy, a coalition of politicians and business leaders dedicated to immigration reform, didn’t comment on Trump’s immigration plan but he stressed that maintaining immigration for highly-skilled workers is vital for the American economy. (The group, which describes itself as bipartisan, is led by Michael Bloomberg, a billionaire and former New York City mayor who has endorsed Hillary Clinton.)

“In a global world where people are competing for talent,” he said, “we're the country that everyone wants to come to.” Adding more hurdles, Robbins said, could further incentivize companies to set up in countries like Canada and Chile, which make it easier to bring in skilled immigrants.

Trump’s position on the H-1B

Though he didn’t discuss H visas specifically in Monday’s speech, Trump has criticized employers’ use of the program before. During the primary campaign, he called for reform of the H-1B system, specifically noting reports alleging that Disney abused the system and brought in unskilled laborers on H-1B visas and made American employees train their replacements. "I remain totally committed to eliminating rampant, widespread H-1B abuse and ending outrageous practices such as those that occurred at Disney in Florida when Americans were forced to train their foreign replacements," Trump said in a statement in March, according to Recode.

Would he pursue that policy if he was elected president? It’s not clear. As a businessman, Trump has reportedly taken advantage of H visas, which allowed him to bring in part time foreign workers to work at his resorts.

]]>http://fortune.com/2016/08/17/trump-immigration-business/feed/0trumpbgfortuneH-1BTurkey Ruling, Opposition Parties Rally Together After Couphttp://fortune.com/2016/07/24/turkey-post-coup-rallies/
http://fortune.com/2016/07/24/turkey-post-coup-rallies/#respondSun, 24 Jul 2016 18:34:52 +0000http://fortune.com/?p=1746610]]>Tens of thousands of supporters of Turkey’s ruling and main opposition parties, usually bitter foes, rallied together on Sunday in support of democracy following a failed military coup as President Tayyip Erdogan tightens his grip on the country.

Demonstrators held a cross-party “Republic and Democracy” rally in Istanbul’s central Taksim Square in a spirit of unity following the failed coup, in which at least 246 people were killed and more than 2,000 injured.

In a rare move, pro-government channels broadcast a live speech from the podium by main opposition leader Kemal Kilicdaroglu.

“This is a day to unite, a day to stand up against coups and dictatorial regimes, a day to let the voice of the people be heard,” he said at the rally, organised by his secularist opposition CHP but also backed by the ruling Islamist-rooted AK Party and by other opposition groups.

“We are all together in Taksim today. Today is a day we made history all together.”

Erdogan will probably try to capitalise on the large size of the crowd of all political persuasions to try and reassert full control over the country, a NATO ally and an important partner in the U.S.-led fight against Islamic State.

In another demonstration of unity after the coup, which was staged by a faction within the armed forces, the head of Turkey’s air force issued a rare statement stressing “absolute obedience” to the chief of the military General Staff. Some members of the air force were involved in the coup.

The chief of the military General Staff, Hulusi Akar, who was held hostage by the plotters on the night of July 15, condemned the plotters on Sunday as “cowards in uniform” who had greatly harmed the nation and the army.

Erdogan, who narrowly escaped capture and possible death during the attempted coup, has declared a state of emergency, allowing him to sign laws without prior parliamentary approval in a drive to root out supporters of the coup.

His critics fear he is using the abortive coup to wage an indiscriminate crackdown on dissent. Turkish authorities have suspended, detained or placed under investigation more than 60,000 soldiers, police, judges, teachers, civil servants and others in the past week.

Prime Minister Binali Yildirim said on Saturday authorities had taken around 13,000 people into custody over the coup attempt, including 8,831 soldiers. He pledged they would have a fair trial.

Rights group Amnesty International said it had received “credible evidence” of detainees “being subjected to beatings and torture, including rape,” since the coup attempt.

“It is absolutely imperative that the Turkish authorities halt these abhorrent practices and allow international monitors to visit all these detainees in the places they are being held,” said Amnesty’s Europe director John Dalhuisen in a statement.

Erdogan has extended the maximum period of detention for suspects from four days to 30, a move Amnesty said increased the risk of torture or other maltreatment of detainees.

Public Radio International reports that women especially feel silenced, and have complained on Twitter TWTR about increased sexual harassment and violence, as well as “misogynist language used by all sides, reducing women to pawns, or spoils of war.”

“The state of emergency is a good thing and it’s good that many people have been arrested and that the length of detentions has been extended,” said demonstrator Harun Kalyancu, 34, a furniture designer and supporter of the ruling party. “If people lost their jobs they must be guilty.”

Zuhal Tolbert, 56, who is retired, said the government should be more inclusive.

“The government has to think about the mistakes they have made they have to think about the other half of the population. (who did not vote for them),” she said. “We all have to come together.”

Erdogan has accused U.S.-based Muslim cleric Fethullah Gulen, who has many followers in Turkey, of masterminding the abortive coup. In his first decree Erdogan ordered the closure of thousands of private schools, charities and foundations with suspected links to Gulen, who denies involvement in the coup.

The CHP and other political parties swiftly joined the ruling Islamist-rooted AKP in condemning the coup attempt, mindful of four other military interventions in Turkey in the past 60 years. The last full-scale coup in 1980 led to mass arrests of politicians and others, torture and executions.

Taksim Square, like much of Istanbul and other cities, is awash with Turkish flags and CHP supporters were also carrying pictures of their hero Kemal Ataturk, the soldier who founded the secular republic on the ashes of the Ottoman Empire in 1923.

Supporters of Erdogan’s AKP, which has ruled Turkey since 2002, have generally tended to use religious symbols and rhetoric. But the coup has united both sides in a blaze of nationalist fervour. Istanbul’s AKP mayor, Kadir Toptas, has provided free public transport for the rally.

Opposition parties have mixed backing for purging coup supporters with calls for reconciliation and restraint.

“Turkey should completely be purified from the rule of the putsch,” said a “Taksim Declaration” issued by the CHP’s Kilicdaroglu. “The state should not be governed by anger and revenge. The culprits of the putsch should be tried lawfully with the understanding of abiding by the rule of law,” it added.

Turkey’s Supreme Military Council (YAS) will meet under Erdogan’s supervision on July 28. Erdogan told Reuters in an interview on Thursday that he would restructure the armed forces and bring in “fresh blood”.

After the coup, Western countries pledged support for democracy in Turkey, but have also expressed concern over the scale of subsequent purges of state institutions.

]]>http://fortune.com/2016/07/24/turkey-post-coup-rallies/feed/0Supporters of various political parties gather in Istanbul's Taksim SquareemmieodeaTurkish President Gains Upper Hand in Power Strugglehttp://fortune.com/2016/07/24/erdogan-gains-upper-hand/
http://fortune.com/2016/07/24/erdogan-gains-upper-hand/#respondSun, 24 Jul 2016 14:16:10 +0000http://fortune.com/?p=1746522]]>At the crossroads between a divided Europe and a convulsed Middle East, Turkey is caught in a power struggle between former Islamist allies which is shaking democratic institutions and raises questions about its future path.

Since a failed coup on July 15, the ruling Justice and Development Party (AKP) founded by President Tayyip Erdogan has gained the upper hand in its battle with clandestine networks in the military, judiciary and bureaucracy loyal to U.S.-based cleric Fethullah Gulen.

This fight to the bitter end has alarmed the West and unsettled the country of 80 million, which borders the chaos in Iraq and Syria and is a Western ally against Islamic State.

Erdogan accuses Gulen of masterminding the attempted coup by a faction within the military and has rounded up more than 60,000 people in an operation which he hopes will cleanse Turkey of what he calls the Gulenist “virus”.

The purges, carried out as Turkey faces attacks by Islamist State and a revived struggle with Kurdish militants, go beyond the more than 100 generals and 6,000 soldiers held, or the nearly 3,000 judges detained.

They already encompass 21,000 teachers and much of the academic community, and new targets in a media already hit by years of firings and fines, mailings, and closures.

“They are traitors,” Erdogan told Reuters in an interview on Thursday. He described Gulen’s network as “like a cancer” and said he would treat them like a “separatist terrorist organization” and root them out, wherever they may be.

Gulen, 75, denies plotting against the state and suggested the day after the abortive coup that it may have been staged to justify a crackdown on his followers.

The millions of members of Gulen’s “Hizmet” (Service) movement do not outwardly identify as supporters. Since the failed coup many are going even further underground, refusing to take calls or trying to leave the country.

Some followers are dumping books in the woods and publishers are getting rid of their stocks, said Nedim Sener, an investigative journalist at Posta newspaper who wrote a book on the Gulen movement's efforts to infiltrate the state and was jailed in 2011 for more than a year.

A senior journalist at a Gulen-affiliated newspaper, speaking on condition of anonymity because he feared reprisals, said he and other editors were afraid to go to the paper’s office in the days following the failed coup and that their printers refused to continue publishing.

“I advised my colleagues not to go to the office for their own safety,” he said. “The newspaper has become a liability, it has just disappeared … I’m afraid for my family and for my life. It’s dangerous to go outside.”

Asked if he was a follower of Gulen's teachings, he said: “Answering this question could now be used as evidence against me. Now I could be prosecuted for a book I keep at home … Everyone is too afraid to call their friends, worried this will cause their detention. It's a climate of fear everywhere.”

Erdogan was prime minister from 2003 until 2014, when he became president. When he first came to power, he led a reinvented Muslim conservative party wary of fiercely secularist generals and judges who had closed a series of Islamist parties.

In the skirmishing that followed, and after the army and the courts tried to push aside the AKP in 2007-08, Erdogan turned for help to Gulen, whose movement had built a loyal following among police, prosecutors and civil servants.

Gulen, a Muslim imam self-exiled in Pennsylvania since 1999, has built a franchise of schools in Turkey and around the world, promoting the importance of education, scientific progress, religious coexistence and fighting poverty.

After their ascent to power, Erdogan and the AKP became dependent on the Gulenists in their common fight against the army. It was mainly Gulenist prosecutors who, after Erdogan and his party narrowly escaped being banned in 2008, built two big conspiracy trials targeting the upper echelons of the army.

These two cases, known as Ergenekon and Sledgehammer, netted more than 40 generals, but also swept up opponents of both the ruling party and the Gulenists. It later became clear after many charges were dismissed that bogus evidence had been used.

Yet at the time, the Gulenists' apparent success in helping Erdogan break the army's grip on Turkish politics emboldened them to demand more power in the security services and the army.

“It is essentially not a struggle about ideology because their ideology is so similar. Both want to turn Turkey into a more conservative Islamised society,” said one Turkey analyst who asked not to be named after the declaration of emergency laws which could hit those critical of the state.

“It is a struggle about power and that alliance broke down because of disagreement over power-sharing.”

If Gulenist penetration of state institutions is as deep as the purges suggest, then much of it must have happened while Erdogan was in charge.

“We never considered even the possibility that they might be involved in this kind of a treason. They were citizens of our country and we supported them to the fullest as citizens of our country,” Erdogan told Reuters.

Sener said there had been a tendency to see Gulen as a religious leader, but he has always rejected this.

“He is a man who is in pursuit of power and power alone. Fethullah Gulen and his followers want to take over the organs of the state,” he said.

“Had (Erdogan) taken this seriously he would have cleaned this up years ago. But he never imagined the guns would be turned on him.”

The struggle between the former allies started in late 2011.

Erdogan had been re-elected that summer for a third term as prime minister, making no secret of his presidential ambitions. His posters emphasized power until 2023, the centenary of Mustafa Kemal Ataturk's founding of the modern republic.

But when he suddenly had to pull back from the political fray and undergo surgery, prosecutors assumed to be loyal to Gulen targeted Hakan Fidan, Erdogan's intelligence chief.

This apparent attempt to push Gulenist influence into the security services was like targeting Erdogan himself, who complained of betrayal, asking publicly: “What is it that we didn't give you that you wanted?”

Tit-for-tat battles followed, electrifying Turkish politics. The government closed down the dershane, a network of private tutoring centers, mostly run by the movement. Gulenist prosecutors in 2013 launched corruption investigations into Erdogan's cabinet and family. The gloves came off.

This degree of state infiltration, and the damaging leaks by prosecutors, revealed a power structure Erdogan loyalists described as a “parallel state” intent on taking power.

“It has aspirations to capture the state. They certainly came quite a long way in reaching this objective, they have certainly been helped and assisted by the AKP,” said Sinan Ulgen, head of the liberal EDAM think tank in Istanbul and a fellow at the Carnegie Europe think tank.

“When AKP came to power they established an alliance. It helped to populate the Turkish administration with Gulenists.”

Government officials say the Gulenists have carefully planned to seize state institutions for over three decades by using their schools and universities to prepare civil servants, something the AKP found difficult to match when it took power.

Gulen schools have identified and groomed generations of capable students, starting from primary schools through university and into their professional life. Many rose to influential jobs in the state and business.

“This is the more benign face of the movement but there is a dark face,” Ulgen said, adding that it has steadily become more powerful over the past decade and succeeded in penetrating bodies such as the police, judiciary and prosecution service.

Sener said government hotlines set up for people to inform on suspected Gulenists meant the movement looked set for a fall.

“This movement will end,” said Sener. “There are a few who are still hidden… To a very large extent, this is the end of the Gulen movement in Turkey.”

]]>http://fortune.com/2016/07/24/erdogan-gains-upper-hand/feed/0Turkish Supporters are silhouetted against a screen showing President Tayyip Erdogan during a pro-government demonstration in AnkaraemmieodeaTurkey’s Erdogan Shuts Schools, Charities in First State of Emergency Decreehttp://fortune.com/2016/07/23/turkeys-erdogan-emergency-decree/
http://fortune.com/2016/07/23/turkeys-erdogan-emergency-decree/#respondSat, 23 Jul 2016 18:37:56 +0000http://fortune.com/?p=1746411]]>President Tayyip Erdogan tightened his grip on Turkey on Saturday, ordering the closure of thousands of private schools, charities and other institutions in his first decree since imposing a state of emergency after the failed military coup.

Turkish authorities also detained a nephew of Fethullah Gulen, the U.S.-based Muslim cleric accused by Ankara of orchestrating the July 15 coup attempt, the Anadolu state news agency reported.

A restructuring of Turkey’s once untouchable military also drew closer, with a planned meeting between Erdogan and the already purged top brass brought forward by several days.

The schools and other institutions are suspected by Turkish authorities of having links to Gulen, who has many followers in Turkey. Gulen denies any involvement in the coup attempt in which at least 246 people were killed.

His nephew, Muhammed Sait Gulen, was detained in the northeastern Turkish city of Erzurum and will be brought to the capital Ankara for questioning, Anadolu reported. Among possible charges that could be brought against him is membership of a terrorist organization, the agency said.

It is the first time a relative of Gulen has been reported detained since the failed coup.

Critics of Erdogan fear he is using the abortive coup to wage an indiscriminate crackdown on dissent. The foundations targeted include, for example, the Association of Judges and Prosecutors (YARSAV), a secular group that criticized a recent judicial law drafted by Erdogan’s Islamist-rooted AK Party.

In his decree, published by the Anadolu state news agency, Erdogan also extended to a maximum of 30 days from four days the period in which some suspects can be detained. It said this would facilitate a full investigation into the coup attempt.

Erdogan, who narrowly escaped capture and possible death during the coup attempt, told Reuters in an interview on Thursday that he would restructure the armed forces and bring in “fresh blood”.

Turkey’s Supreme Military Council (YAS) will meet under Erdogan’s supervision on July 28, a few days earlier than originally planned, private broadcaster NTV reported, a sign that the president wants to act fast to ensure the armed forces are fully under the government’s control.

Reinforcing that message, the YAS meeting – which usually takes place every August – will be held this time in the presidential palace, not as is customary at the headquarters of the military General Staff.

Erdogan, a popular but polarizing figure who has dominated Turkish politics since 2003, declared the state of emergency late on Wednesday, saying it would enable authorities to swiftly and effectively root out supporters of the coup.

The emergency allows Erdogan and the AK Party government, who are mildly Islamist, to pass laws without first having to win parliamentary support and also to curb or suspend rights and freedoms as they deem necessary.

Turkish authorities have already launched a series of mass purges of the armed forces, police, judiciary and education system, targeting followers of Gulen, who operates an extensive network of schools and charitable foundations.

The first decree signed by Erdogan authorizes the closure of 1,043 private schools, 1,229 charities and foundations, 19 trade unions, 15 universities and 35 medical institutions over suspected links to the Gulen movement, the Anadolu agency said.

Parliament must still approve the decree but requires only a simply majority, which the government has.

In an address to parliament late on Friday, Erdogan vowed to bring to justice supporters of the Gulenist “terrorist” movement and he urged Turks to continue attending rallies in major cities in support of democracy and against the coup plotters.

More rallies were planned over the weekend in many towns and cities. In Istanbul, Turkey’s commercial capital, authorities have allowed people to travel for free on the metro system so they can more easily attend the rallies. Video screens on trains show pictures of citizens, or “martyrs,” killed in the violence.

Cars and mini-buses honking their horns drive around the streets until late in the night carrying flag-waving supporters of Erdogan shouting patriotic or religious slogans.

On Friday evening Erdogan held his first meeting since the coup with the head of the national intelligence agency, Hakan Fidan, after complaining of significant intelligence shortcomings ahead of the coup attempt. Despite media speculation, however, he did not sack Fidan.

Foreign Minister Mevlut Cavusoglu told private broadcaster NTV that Turkey expected to complete within 10 days a dossier requesting Gulen’s extradition from the United States.

Cavusoglu said the link between soldiers involved in the failed coup and Gulen’s extensive network of followers was “very clear”, adding that Turkey would do all it could “politically and legally” to secure his extradition.

The United States has said Ankara needs to provide clear evidence of Gulen’s involvement before it can agree to extradite him. Lawyers say that process could take many years.

After the coup, Western countries pledged support for democracy in Turkey, a NATO ally and an important partner in the fight against Islamic State, but have also expressed concern over the scale of the subsequent purges of state institutions.

Turkish authorities have suspended, detained or placed under investigation more than 60,000 soldiers, police, judges, teachers, civil servants and others in the past week.

Critics of Erdogan in Turkey and abroad fear he is using the failed coup to wage an indiscriminate crackdown on his opponents. They say the purges risk sweeping up innocent people too and that some institutions being shut down may have little or no connection to Gulen’s movement.

Speaking at a meeting of G20 finance ministers and central bankers in China on Saturday, Turkish Deputy Prime Minister Mehmet Simsek said Turkey would strongly adhere to democratic principles and the rule of law.

In Ankara, the minister for European Union affairs chided Western countries for not sending any representatives to demonstrate their solidarity with Turks since the coup attempt.

“We are very surprised that our allies have not come to Turkey to visit even after one week has passed,” Omer Celik told reporters.

]]>http://fortune.com/2016/07/23/turkeys-erdogan-emergency-decree/feed/0Erdogan declares 3-month state of emergency to 'eliminate coup-plotter terrorist group'emmieodeaBin Laden’s Son Threatens Revenge for Father’s Assassinationhttp://fortune.com/2016/07/10/bin-ladens-son-threatens-revenge/
http://fortune.com/2016/07/10/bin-ladens-son-threatens-revenge/#respondSun, 10 Jul 2016 18:09:51 +0000http://fortune.com/?p=1727832]]>The son of slain al Qaeda leader Osama bin Laden has threatened revenge against the United States for assassinating his father, according to an audio message posted online.

Hamza bin Laden promised to continue the global militant group’s fight against the United States and its allies in the 21-minute speech entitled “We Are All Osama,” according to the SITE Intelligence Group.

“We will continue striking you and targeting you in your country and abroad in response to your oppression of the people of Palestine, Afghanistan, Syria, Iraq, Yemen, Somalia and the rest of the Muslim lands that did not survive your oppression,” Hamza said.

“As for the revenge by the Islamic nation for Sheikh Osama, may Allah have mercy on him, it is not revenge for Osama the person but it is revenge for those who defended Islam.”

For more on the bin Laden assassination, watch:

Osama bin Laden was killed at his Pakistani hideout by U.S. commandos in 2011 in a major blow to the militant group which carried out the Sept. 11, 2001 attacks.

Documents recovered from bin Laden’s compound and published by the United States last year alleged that his aides tried to reunite the militant leader with Hamza, who had been held under house arrest in Iran.

Hamza, now in his mid-twenties, was at his father’s side in Afghanistan before the 9/11 attacks and spent time with him in Pakistan after the U.S.-led invasion pushed much of al Qaeda’s senior leadership there, according to the Brookings Institution.

Introduced by the organization’s new chief Ayman al-Zawahiri in an audio message last year, Hamza provides a younger voice for the group whose aging leaders have struggled to inspire militants around the world galvanized by Islamic State.

“Hamza provides a new face for al Qaeda, one that directly connects to the group’s founder. He is an articulate and dangerous enemy,” according to Bruce Riedel of Brookings.

]]>http://fortune.com/2016/07/10/bin-ladens-son-threatens-revenge/feed/0Newspaper headlines and clippings are posted on a wall inside a staff office at the White House in WashingtonemmieodeaSaudi Seeks International Investors for Two Solar Plantshttp://fortune.com/2016/06/12/saudis-seek-solar-investors/
http://fortune.com/2016/06/12/saudis-seek-solar-investors/#respondSun, 12 Jun 2016 13:32:26 +0000http://fortune.com/?p=1695423]]>Saudi Arabia is seeking international investors to build two solar power plants, using a deal structure that could become a model for the kingdom’s infrastructure projects as low oil prices pressure the government’s finances.

State-owned utility Saudi Electricity (SEC) said at the weekend that it was inviting expressions of interest from companies or consortiums around the world in building two solar plants at Al-Jouf and Rafha in the north of the country.

As much as 50 megawatts of capacity will be developed at each site on land provided by SEC, and the developers will sell the electricity to SEC under long-term agreements. One Gulf power industry executive estimated that each plant might cost between $100 million and $120 million to build.

For more on solar, watch:

Saudi Arabia used to build the vast majority of its infrastructure projects with state money, but that is changing as low oil prices saddle the government with a huge budget deficit, forcing it to find other sources of finance.

A broad economic reform plan announced last week focused on introducing public-private partnerships in which private companies would provide much of the financing for projects and then operate them to earn profits.

In April, Saudi Arabia said it planned to generate 9.5 gigawatts of electricity from renewable energy by 2030 which would help to conserve its oil production for export rather than use in power generation.

]]>http://fortune.com/2016/06/12/saudis-seek-solar-investors/feed/0Saudi Arabia farms 2014emmieodeaBoston Market Is Entering the Chicken Sandwich Warhttp://fortune.com/2016/06/06/boston-market-chicken-sandwich/
http://fortune.com/2016/06/06/boston-market-chicken-sandwich/#respondMon, 06 Jun 2016 14:32:27 +0000http://fortune.com/?p=1684992]]>For over 30 years, Boston Market has carved out a niche in the restaurant world as a purveyor of rotisserie chickens. It may ruffle a few feathers with its next menu innovation: A new lineup of crispy chicken meals.

The Colorado-based restaurant chain, with over 450 locations nationally, on Monday said the company’s new limited time offering would focus on a new chicken line that could be found in sandwiches, wraps and salads. The chicken is baked, rather than fried, as Boston Market believes health-conscious consumers are trying to stay away from fried foods.

“We wanted to really look at other ways consumers eat chicken,” Boston Market CEO George Michel told Fortune. “If you look at brands that have done well in the last 10 years with chicken, they focus on breaded chicken sandwiches and chicken tenders. We decided we needed to look at those trends.”

Most notably, Shake Shack shak has scored a hit with a new chicken sandwich that generated a lot of buzz and even gave the chain a bigger-than-expected sales boost in the most recent quarter. The Chick'n Shack has been viewed as a “game changer” by that chain.

Boston Market says its own launch in the category could be equally revolutionary. The chain specializes in mainly selling dishes that are meant to replace a full, sit-down meal. Selling chicken sandwiches are a conscious departure from that strategy, helping expand the menu in both flavor profile and consumption format.

Michel says he was an early convert. After tasting the first chicken sandwich, he said he “couldn’t stop eating it.” Michel took home two sandwiches and ate them for dinner that night.

“That led me to think, ‘We are on the right track,'” he said.

A note of caution: the chain’s chicken sandwich debut is entering a bit of a “down market.” Servings of breaded chicken sandwiches at restaurants dropped 2.5% for the year-ending in April 2016 and slipped 2.2% in 2015, according to research firm The NPD Group. Still, 2.3 billion breaded chicken sandwiches are ordered annually, so the market is massive.

International expansion

Boston Market on Monday also announced it will move to expand abroad, opening dozens of locations in the Middle East under a franchise agreement with Al-Ghunaim Trading Co., which already works with Chili’s, The Coffee Bean and Tea Leaf, and other dining chains. Boston Market, which is planning it open 12 new restaurants in the U.S. this year, is targeting a first restaurant opening abroad in Kuwait by early 2017.

The chain only made one other attempt at expansion abroad, testing the concept in Australia and Canada briefly back when McDonald’s mcd owned the brand. After McDonald’s opted to sell the business, they closed those locations.

But with sales on the rise in the U.S., up about 36% over the past five years, the company felt like it was finally in a good financial position to hunt for growth abroad.

“Going to the Middle East gives us a good entry point into other international markets,” said Michel. The plan is to focus on that region, as Boston Market wouldn’t disclose its longer-term international expansion strategy.

]]>http://fortune.com/2016/06/06/boston-market-chicken-sandwich/feed/0Oven%20Crisp%20Chicken%20Sandwich%201johnnerkellRussian Hopes for Iran Trade Boom Run Aground at Caspian Porthttp://fortune.com/2016/06/05/russia-iran-trade-boom-caspian/
http://fortune.com/2016/06/05/russia-iran-trade-boom-caspian/#respondSun, 05 Jun 2016 15:38:46 +0000http://fortune.com/?p=1685951]]>When sanctions on Iran were lifted in January, Russia might have expected to be near the front of the queue for business opportunities. Moscow, after all, was one of Tehran’s oldest allies and is now its partner on the battlefield in Syria.

On the evidence of the commerce passing through the Caspian Sea port of Astrakhan, the main jumping-off point for Russian sea-borne trade with Iran, it’s not playing out like that.

The value of goods shipped from the Astrakhan region to Iran in the first four months of this year was down 16% on the same period last year, according to the regional government.

“There’s a pause with grain, timber products are being loaded, metal gets shipped very rarely and then only in very small consignments,” said Artyom Ulyanov, commercial director of Astrakhan’s central cargo port. “Overall, we’re loading less that we did in previous periods.”

That, according to traders and shipping industry sources, is partly because Russian red tape is choking trade at a time when Iranians can do deals with Western countries that were effectively closed off to them before because of sanctions.

To be sure, the port at Astrakhan is only a snapshot of the state of Russian-Iranian ties. But it could point to the limitations of a relationship that is forged from a convergence of interests in areas like Syria rather than a shared world view.

The mood around the wharfs and dockyards at Astrakhan, Russia’s biggest Caspian Sea port, is sour.

On a visit late last month, a Reuters correspondent found that cranes in several sections of the port were standing still because there was no cargo to move.

“Before, we had to search for ships” to carry cargo to Iran because the volume of the trade was so high, said the owner of a grain-exporting company that supplies Iran, speaking of trade before the international sanctions were lifted.

Now, said the businessman, who asked not to be identified so he could speak candidly, ship operators came knocking on his door looking for business.

Last month, Russia’s ministry for economic development organized a Russian-Iranian business forum meant to take place in Astrakhan. Russian Energy Minister Alexander Novak was scheduled to attend.

It was called off, with the local government citing “circumstances that have arisen.” Some participants only found out the event was off when they were already on the way there.

“We and another thousand people from Iran got tickets and visas, but they called off the forum two days before it starts,” said Taban Tizgush, president of the chamber of trade and industry in the Iranian province of Gilan, on the Caspian Sea.

“That causes us a lot of damage.”

For more on international trade, watch:

How Iran and Russia get along with each other matters globally.

The joint operation between Russia’s air force, Iran’s military and the Iranian-allied Hezbollah militia turned the tide of the Syrian civil war in favor of President Bashar al Assad’s administration, frustrating Western efforts to push him out and testing U.S. influence in the Middle East.

What happens next in Syria depends in large degree on whether the Russian-Iranian partnership holds together and keeps backing Assad.

The port at Astrakhan gives one perspective on ties between the countries. Elsewhere, deals are being done.

Russia’s government said last year it had agreed joint projects with Iran worth $40 billion. A Russian shipbuilder won a contract in May worth nearly $1 billion to build five offshore drilling rigs for Iran. Moscow is also selling sophisticated weapons to Tehran, including S-300 air defense missiles.

But the mood at the port chimes with a more general atmosphere of tension in ties between Iran and Russia.

Some Iranian officials are wary of getting too close to Russia, which occupied Iran twice in the 20th century. Russia for its part is wary of Iran becoming too powerful and of alienating Iran’s rivals in the Middle East.

Interactions between the Kremlin and Iranian officials can, at times, be fraught.

When Russian President Vladimir Putin visited Tehran in November last year for a gas exporters’ forum, Iranian security officials barred reporters traveling with Putin from entering the venue.

That sparked an argument between Iranian security and Kremlin press service officials, and in the scrum that resulted, Russian Foreign Minister Sergei Lavrov and Novak, the energy minister, were jostled, according to a Reuters reporter who was there.

In an interview with Reuters, Alexander Zhilkin, the Astrakhan region governor, said grain exports this year would be lower than in 2015 because Iran was enforcing temporary grain import restrictions.

But he said he expected trade to double within 18 months of all the international sanctions being lifted on Iran.

“Petrochemicals, paper, glass, wood, wood products; there is demand for all of that,” he said. “This year, unexpectedly, we’ve had requests from Iran for potatoes and onions.”

However, local business people say the deeper problem is not demand.

Traders who move goods through Astrakhan to Iran talk of layers of red tape that can hold up cargoes for months, of corrupt officials withholding permissions, and of import and export regulations changing without warning.

Despite those issues, during the years of sanctions trade was healthy. That was in part because Russian companies were prepared to take the risk of doing transactions with Iran, while many other countries were not.

The main exports via Astrakhan--wheat, timber and scrap metal--were not banned by sanctions. But the international restrictions imposed over Tehran’s disputed nuclear program effectively barred Iran from international financial systems, so settling bills was complicated.

Russian firms found ways around that, by using intermediary banks in third countries. Grain exports from Russia to Iran grew while sanctions were in force.

But with sanctions gone, business people in Astrakhan predict that big global grain traders will now move into the Iran market, squeezing out Russian players.

The big global traders will have lower costs because they can deliver grain on vessels of up to 70,000 tonnes via Iran’s Gulf ports, while the maximum size of vessels in the Caspian is 6,000 tonnes, said Hossein Lotfi, owner of a trading firm.

“If Russia does not take steps to hold onto its trade with Iran, it could lose 20 to 30% of grain exports,” said Lotfi, who is also a consultant to Astrakhan’s chamber of commerce with Iran.

“Once payments are simplified new players could come into the south of Iran, and they can offer lower prices.”

]]>http://fortune.com/2016/06/05/russia-iran-trade-boom-caspian/feed/0Russia farming sunset 2014emmieodeaUber Raises $3.5 Billion From Saudi Arabiahttp://fortune.com/2016/06/01/uber-funding-saudi-arabia/
http://fortune.com/2016/06/01/uber-funding-saudi-arabia/#respondWed, 01 Jun 2016 21:39:22 +0000http://fortune.com/?p=1681433]]>Ride-hailing giant Uber has just closed one of the largest funding rounds by a tech company in recent history.

The company said on Wednesday that it had closed $3.5 billion in new funding from Saudi Arabia's Public Investment Fund, at an unchanged valuation of $62.5 billion. As part of the deal, Public Investment Fund (PIF) managing director Yasir Al Rumayyan will join Uber’s board, the company said. Rumors of Uber’s latest fundraising efforts first surfaced last fall, and the round has now fully closed, the company confirmed.

Last week, Uber revealed it has pocketed an undisclosed amount of funding from Toyota, with which it will also partner to provide its drivers with more affordable car purchase and lease terms.

PIF’s investment in Uber is part of Saudi Arabia’s plan to shift by 2030 from its reliance on oil revenue.

Uber, one of the most highly capitalized private companies with billions in previous funding, has been raising money from a wide variety of investors including traditional venture capitalists, the wealthy clients of Goldman Sachs, other sovereign funds like Qatar’s, and Russian businessmen via the LetterOne investment fund.

For Uber, which is still battling for customers against Lyft in the U.S., and overseas rivals like Didi Chuxing in China and its allies Ola in India, Grab in Southeast Asia, has said that the Middle East is an important area for the company. Uber has previously said it plans to invest $250 million in the region, where it currently operates in 15 cities across nine countries.

Still, local incumbents have proven equally fierce and skilled at getting big financial backing from major players. Recently, Apple aapl announced a $1 billion investment in Didi Chuxing, while automaker General Motors @general gm poured $500 million into Lyft, with which it will partner on getting driverless cars on the road. Gett, an Israeli competitor, also recently banked a $300 million investment from Volkswagen.

]]>http://fortune.com/2016/06/01/uber-funding-saudi-arabia/feed/0Taxi Drivers Protest Possible Uber Expansion In NYCkiakokalitchevaAbercrombie and Fitch Is Expanding Further Into the Middle Easthttp://fortune.com/2016/05/09/abercrombie-and-fitch-middle-east/
http://fortune.com/2016/05/09/abercrombie-and-fitch-middle-east/#respondMon, 09 May 2016 17:06:58 +0000http://fortune.com/?p=1651941]]>The company once known for its sexualized advertising and accused of discrimination against a Muslim job applicant is now moving deeper into the Middle East.

Abercrombie and Fitch anf, which already has stores in Kuwait and Dubai, plans to now expand into Saudi Arabia, Qatar, Bahrain, and Oman in partnership with Majid Al Futtaim Fashion--a company which operates with several prominent Western brands to bring stores to the Middle East.

“We expect there to be strong demand for our brands in these new markets,” said Arthur Martinez, CEO of Abercrombie and Fitch in a Monday press release. International markets represented about 35% of Abercrombie’s sales in 2015.

Abercrombie & Fitch has been struggling in the past few years as a result of its exclusive image and missteps under the direction of former CEO, Mike Jeffries . The company has weathered 10 straight quarters of sales declines, and has tried in recent months to shed its image by toning down sexualized advertising, creating trendier clothing, and emphasizing diversity.

The company, also once known for its topless models, has also been trying to expand into international markets such as the Middle East and China.

"The Abercrombie and Fitch store, environment, and teams will be respectful to the culture of the region and its sensitivities, whilst maintaining the brands values and identity," Asil Attar, CEO of Majid Al Futtaim Fashion, said in an interview with Gulf News, a UAE news site in 2013, when Abercrombie first announced its shop in Dubai.

]]>http://fortune.com/2016/05/09/abercrombie-and-fitch-middle-east/feed/0Abercrombie & FitchlucindashenWhy America’s ‘Special’ Relationship With Saudi Arabia Is On the Rockshttp://fortune.com/2016/04/22/why-americas-special-relationship-with-saudi-arabia-is-on-the-rocks/
http://fortune.com/2016/04/22/why-americas-special-relationship-with-saudi-arabia-is-on-the-rocks/#respondFri, 22 Apr 2016 07:00:08 +0000http://fortune.com/?p=1633254]]>Ever since Saudi Arabia’s King Abdul Aziz Ibn Saud was hoisted atop his gilded throne onto a U.S. warship in 1945 to meet Franklin D. Roosevelt, every American president has journeyed to the region to nurture one of Washington’s most crucial relationships.

This week, it was President Obama’s turn. Obama landed in Riyadh on Wednesday with a gordian knot of issues to untangle with the current Saudi monarch King Salman, who presides over the world’s biggest oil power. Those issues have rendered the Saudi-U.S. relationship prickly and tense for more than a year, and include:

Saudi financing of jihadist groups.

Weak participation of wealthy Gulf countries in fighting ISIS.

Low oil prices, which have badly damaged Saudi Arabia's economy and complicated the world’s recovery from the Great Recession.

President Barack Obama (top) waves as he boards a plane at King Khalid International Airport following a US-Gulf Cooperation Council Summit in Riyadh, on April 21, 2016.JIM WATSON AFP/Getty Images

There is even an explosive new issue: Whether Saudi Arabia supported the 9/11 terror attacks against the U.S. in 2001; a proposed bill in Congress would declassify details about the Saudi role, and allow victims’ relatives to file lawsuits against the Saudi government. The Saudis have threatened to sell their roughly $750 billion in U.S. Treasuries and other dollar-denominated assets if the bill becomes law, according to The New York Times.

Still, one issue looms larger than all of those: Iran’s nuclear deal signed last July with the U.S. and Europe, which ended many Western sanctions against Iran and could draw Washington closer to the Saudis’ arch enemy and rival--a rivalry that has impacted the entire Middle East since the Iranian Revolution in 1979 brought conservative Shiite mullahs to power. The nuclear deal with Iran could fundamentally transform the U.S.-Saudi relationship.

“We are talking about a marriage in which there is a considerable amount of bickering. The two sides are attempting to restore a measure of public peace, even if they continue to quarrel behind the scenes.” – Charles W. Freeman, former U.S. ambassador to Saudi Arabia, on CNN.

But the public optics were not good in Riyadh.

King Salman chose not to greet President Obama when Air Force One touched down in Riyadh on Wednesday, sending the Governor of Riyadh to stand on the red carpet instead. The state-run TV did not air Obama’s greeting at King Salman’s palace--even though the photos were splashed across the country’s newspapers Thursday. And after Obama’s two-hour, closed-door talks with the King--the longest meeting the two leaders have held--Ben Rhodes, a deputy national security advisor, said it had been “a very open and honest discussion” and that the two men had an “opportunity to clear the air.”

At stake for each leader are needs--from military engagement to human rights commitments--which they might simply not be able to obtain.

On Thursday, Obama said he had promised both King Salman and the Gulf leaders he met with at the region’s Gulf Cooperation Council that he would keep close tabs on Iran, watching whether the world’s biggest Shiite power uses its new billions in Western investment to flex its military muscle.

Obama told reporters on Thursday that he had pushed the Gulf countries’ leaders in his closed-door meetings to participate more in the U.S.-led bombing campaign against ISIS in Syria and Iraq.

For months, U.S. officials have grown increasingly irritated at having been drawn into the war against ISIS while Saudi Arabia is backing jihadist rebel movements in the Syrian conflict. Saudi rulers adhere to the hardline Wahhabist strain of Islam, and the government devotes about 25% of Saudi Arabia’s budget to military spending, much of it buying U.S. fighter jets, missile systems, and other hardware.

Arab leaders have remain relatively removed from the bombing campaign against ISIS, preferring to let the world’s most powerful military force take the lead; American jets have pounded ISIS positions for months, decimating the terror group’s hold on key positions of Syria, and obliterating key oil installations, which had brought it huge revenues.

US President Barack Obama (R) shakes hands with Prince Faisal bin Bandar bin Abdelaziz al-Saud, Governor of Riyadh, as he arrives at King Khalid International Airport in the Saudi capital, on April 20, 2016.JIM WATSON AFP/Getty Images

Then last year, Saudi Arabia launched a fierce war against Shiite Houthi rebels in neighboring Yemen, the Arab world’s poorest nation; the United Nations estimates that millions have lost their homes, and thousands have been killed.

‘It’s Not Too Much to Ask’

Much like the Syrian War, the Yemen conflict has embroiled the U.S. in a conflict that poses little obvious threat to America. And just like Syria, it risks inflaming anti-U.S. extremism in the region. U.S. intelligence has been key to pinpointing Saudi targets in Yemen, and Saudi bombs and jets are all American-made.

“Yemenis will tell you this is not a Saudi bombing campaign, it is a U.S. bombing campaign,” Senator Christopher Murphy (D.-Conn.) said on Thursday at a panel discussion on U.S.-Saudi relations at the Brookings Institution in Washington. Murphy and Senator Rand Paul (R.-Ky.) are pushing to make U.S. arm sales to Saudi Arabia contingent on them stopping their bombing attacks on civilians in Yemen, and allowing in humanitarian relief. “It is not too much to ask,” said Murphy. “We need to start to expect a little bit more in our relations with the Saudis.”

US President Barack Obama delivers a speech following a US-Gulf Cooperation Council Summit in Riyadh, on April 21, 2016.JIM WATSON AFP/Getty Images

Aside from the war against ISIS and Yemen’s rebels, the U.S. now also finds itself in the midst of a battle in the region over oil.

Oil prices, which have rebounded in recent weeks but are still down 50% from 2014 highs, have pummeled the Saudi economy. In December, the Saudi government announced a budget deficit for 2015 of about $135 billion, which it filled largely by drawing down hundreds of millions of dollars of its foreign reserves. Much of those reserves are held in U.S. Treasury securities, which Saudi officials have threaten to dump if Congress passes the 9/11 bill. Economists believe that is unlikely, given Saudi Arabia’s fragile economy right now.

Not surprisingly, Saudi Arabia has pushed countries to try boost world prices--in part, by having OPEC cut the amount its members produce. “Lower oil prices is a negative sum game,” Ibrahim Al-Muhanna, advisor to the Saudi oil minister, told an oil conference in Paris on Thursday. “Everyone is losing.”

That message has brought fury in Iran, whose economy has been battered by years of sanctions.

Just as Obama was meeting King Salman on Wednesday, the head of Iran’s National Oil Corporation announced that the country would produce four million barrels a day by June--nearly double its output under sanctions. The announcement made front-page news in Iran. There, oil revenues are seen not only as a way to kickstart the economy after years of sanctions, but also as a way of standing up to their Saudi rivals.

“We lost 1.5 million barrels a day of exports during sanctions,” Aliakbar Vahidi Aleagha, managing director of Iran’s Pasargad oil company, tells Fortune. Asked whether Iran would consider the Saudi’s demands to limit exports, he replied, “That is crazy. It is like asking someone in the hospital not to recover.”

Meanwhile, political analysts in Tehran remain deeply frustrated--even perplexed--about the U.S.’s close ties to Saudi Arabia. “America ought to look at Iran as a strategic partner,” said Nasser Hadian, political science professor at the University of Tehran. “Instead they are putting all their eggs in the basket of Saudi, which is very fragile and resting on Wahhabism.”

There is no sign that the intense enmity between Iran and Saudi Arabia will end--perhaps explaining why U.S. officials said little about it publicly in Riyadh.

]]>http://fortune.com/2016/04/22/why-americas-special-relationship-with-saudi-arabia-is-on-the-rocks/feed/0US President Barack Obama in Saudi ArabiaaarontaskSAUDI-US-GULF-SUMMITSAUDI-US-GULF-DIPLOMACY-OBAMASAUDI-US-GULF-SUMMITThis New Tower in Dubai Could Be The World’s Tallesthttp://fortune.com/2016/04/11/dubai-new-worlds-tallest-building/
http://fortune.com/2016/04/11/dubai-new-worlds-tallest-building/#respondMon, 11 Apr 2016 12:48:21 +0000http://fortune.com/?p=1619419]]>Dubai developer Emaar Properties has unveiled details of a new record-setting tower that is expected to be the tallest building ever.

For now, Emaar is simply calling the building “The Tower.” Specifics about its height and full name weren’t disclosed, though the developer said it will construct the building in the waterfront Dubai Creek Harbour, becoming part of a bigger planned project as Emaar aims to carve out a new section of the city that would be twice the size of downtown Dubai.

Emaar said the new building would be a “notch higher” than the previous record setter, Dubai’s Burj Khalifa, according to theWall Street Journal. At 2,716.5 feet, Burj Khalifa--which currently holds the Guinness World Record for the tallest building--has 160 habitable levels, the most of any building in the world. Burj Khalifa, which marked its sixth anniversary at the beginning of this year, was also developed by Emaar.

For some additional context, the new building--if slightly taller than Burj Khalifa--would also be far loftier than the tallest building in the U.S., New York City’s One World Trade Center (1,792 feet).

Mohamed Alabbar, chairman of Emaar Properties, espoused in a prepared statement that the building would be “a shining beacon of hope for the world, celebrating diversity and human achievements.” He indicated the tower would be built before Dubai hosts the World Expo fair in 2020.

The design, by architect Santiago Calatrava, was inspired by the lily and also a minaret, which is a feature of Islamic architecture where a call to prayer is made.

]]>http://fortune.com/2016/04/11/dubai-new-worlds-tallest-building/feed/0The Tower at Dubai Creek Harbour (5)johnnerkellThis Is How ISIS Makes Its Moneyhttp://fortune.com/2016/03/03/isis-money-forex-markets/
http://fortune.com/2016/03/03/isis-money-forex-markets/#respondThu, 03 Mar 2016 19:34:41 +0000http://fortune.com/?p=1572293]]>The terror group known as ISIS, ISIL, or Daesh, that self-identifies as the Islamic State, is apparently raking in big bucks by gaming financial systems in the Middle East.

Experts on the group last month told a subcommittee of the United Kingdom Parliament that ISIS has been exploiting loopholes in foreign exchange operations, CNBC reports. The militant group could be making as much as $25 million per month, the experts said, on top of what it is already making from taxes, extortion, donations, smuggling migrants, and trafficking in oil.

David Butter, an associate fellow at Chatham House, an international affairs think-tank, argued before the Foreign Affairs committee that common estimates of the group’s oil revenues--more than 40% of a reported total of $80 million a month--are over-inflated. (He also argued that “monthly” metrics are misleading, given the instability of the group’s finances.) Rather, he and others on the panel said, a more reliable recurring source of revenue for ISIS involves shuffling funds across borders, taking advantage of exchange rate fluctuations and an informal network of brokers called “Hawala.”

“There are other places you need to look for the money,” Butter told the subcommittee, which was tasked with exploring ways to disrupt the terror group’s finances. (You can watch the full video here.) “The Iraqi central bank foreign currency auction systems are an area that needs to be investigated very strongly.”

For more on ISIS, watch:

ISIS members, Butter said, have moved money from banks in Mosul, an ISIS-controlled city in northern Iraq, to ones in Jordan. Then they’ve moved it back into Iraq through Ramadi, formerly an ISIS bastion in central Iraq. The complex arrangements allow the group to exploit imbalances in currency markets. “So when the Iraqi Government does its regular foreign currency auctions, the ISIS money is inserted into that system and they can make a margin on the differences between the various exchange rates there and send it back into their areas through Hawala operatives,” Butter said. “This is the way money moves in the Middle East.”

As far as solutions to impeding ISIS funding go, Butter suggested that the international community should work closely and cooperatively with Iraqi financial authorities in order to close gaps in the system. “There’s not a magic wand we can throw at this,” he said.

]]>http://fortune.com/2016/03/03/isis-money-forex-markets/feed/0Half dinar banknote Iraq 2016rhhackettfortuneWhat Black Lives Matter Can Learn from the Arab Springhttp://fortune.com/2016/02/22/arab-spring-black-lives-matter-activism/
http://fortune.com/2016/02/22/arab-spring-black-lives-matter-activism/#respondMon, 22 Feb 2016 15:51:34 +0000http://fortune.com/?p=1557352]]>When thousands came together in Egypt's Tahrir Square in early 2011, connected in anger and frustration by social media, many of us thought it was the dawn of a new era of democratization. Give the people the Internet and the ability to self-organize, the thinking went, and they will be able to take power from despots and design a system that is fairer, more open and certainly more transparent.

The same idea animated discussions of social protests from Hong Kong and Kiev to the Occupy Wall Street and Black Lives Matter movements. And this idea is partially right--social media and the Internet, as Tom Friedman recently pointed out, are very good at breaking things. The problem is that they are very, very bad at creating true transformations, and it is fairly easy to understand why.

At Columbia Business School, where I teach, we use a very simple formula for thinking about what is necessary for a successful, lasting transformation to take place in a business or other organization (like a country). The change formula we use (C = D x V x P > R) was developed by Harvard Business School professor Michael Beer, and it suggests that the likelihood of success depends upon three variables or factors that multiply one another.

The first factor is the level of dissatisfaction (D) with the current state. Absent a clear sense that something isn't working well today, potential change agents aren't likely to pay much attention to doing things better or differently.

The second factor is the clarity of the vision (V) of what a better future state would look like. Absent some vision of how things could be better than they are now, people are simply likely stew in frustration rather than act, leaving whatever change effort there is to just limp along.

The third and, in my view, most telling factor, is the clarity and leadership of the process (P) for removing obstacles and creating the new system that replaces the old one.

And of course, these forces have to be stronger than the forces of resistance (R) opposing them.

This is why I think Friedman's article is so powerful, and why we need to be very careful about launching change in general--whether it is national transformation, corporate overhauls, or even change in political leadership--without deeply understanding whether we have these factors in place.

In the Arab Spring, the Internet did indeed serve the function of creating massive dissatisfaction, which despite the state's efforts to quash it, became so powerful that leaders were toppled. And that dissatisfaction was fueled by a fairly clear vision of what a model of a better life would look like. Indeed, Friedman intimates that the success of Dubai may well have crystallized that longing. He suggests that for many young Arabs, Dubai came to represent an Arab country that could build world-class, multi-cultural companies (such as Dubai Ports and Emirates Airlines) and where people could find opportunities, enjoy arts and culture, and participate in a society tolerant of secular values. As Friedman quotes the thought process, "Even if we can't have democracy, why can't we at least have Dubai?" It's one thing to longingly observe the success of Singapore, where the culture is so different. It's quite another to see the success amongst people who speak your language and share many of your traditions.

So, we have the first two ingredients for change in place: massive dissatisfaction and a model worth longing for. But what about the third? That's where I think the optimism about the Internet leading inevitably to better governance structures was misplaced. When the change equation lacks the plan and process piece, the whole effort creates a vacuum. With high levels of dissatisfaction and a clear goal, you can put together a coalition of people with enormously inflated expectations and get change started. But when it comes time to replacing the old systems and structures, if there is no clear plan and no process leader who can articulate it, you create a void. And power hates a void.

Napoleon's rise after the French revolution, Hitler's after the First World War, and the rise of the Muslim Brotherhood in Egypt offer cautionary examples of what happens in a void. Failing to think through the processes and have leaders in place before a change movement is launched almost always dooms the effort. But in an age of the Internet, when dissatisfaction is amplified, the risk of this happening vastly increases.

So how can one lessen this risk?

The relative success of Tunisia in becoming a democracy offers some interesting lessons. First, the country had fairly strong institutional relationships among labor unions, civic associations, and professional societies that provided social capital and infrastructure to fill in the power vacuum. This meant that there were secular parties who had power. As a consequence, Tunisia's traditionalist party, Ennahda, was forced to cooperate, and with a far more moderate agenda than in many of the other Arab Spring countries. Following the fall of dictator Zine El Abidine Ben Ali, Tunisia's leaders moved quickly to put in place a process to elect a Constituent assembly.

The main lesson is that there were process leaders who avoided the kind of power and process vacuum that has left so many other Arab countries in such disarray. It is worth noting that these leaders were not imposed from outside, nor were they of the heroic breast-beating variety. By all accounts, they worked systematically to put in place the new processes and systems which would replace the ones being abandoned.

Void avoided.

]]>http://fortune.com/2016/02/22/arab-spring-black-lives-matter-activism/feed/0Jasmine RevolutionimountWhat Saudi Arabia’s Spat With Iran Means for the U.S.http://fortune.com/2016/01/06/saudi-arabia-iran-sheikh-nimr-al-nimr/
http://fortune.com/2016/01/06/saudi-arabia-iran-sheikh-nimr-al-nimr/#respondWed, 06 Jan 2016 18:42:07 +0000http://fortune.com/?p=1505757]]>Earlier this week, Saudi Arabia cut off diplomatic ties with Iran after authorities executed a popular Shiite cleric. Anyone watching this meltdown unfold has every reason to think of worse-case scenarios, as it will only deepen the Middle East's widening sectarian divide, intensify the region's multiple conflicts, and set back efforts to defeat the Islamic State and end the bloodshed in Syria.

For years, the Middle East has been defined by political instability, and the execution of Sheikh Nimr al-Nimr and subsequent attack on the Saudi embassy in Teheran is only the most recent episode in a longstanding rivalry between the two powers dominating opposite shores of the Gulf -- the world's most important oil chokehold through which 30% of global oil and liquefied natural gas flows.

Each claims to be the face of the true and authentic variant of Islam. Saudi Arabia, custodian of Islam's two leading holy places in Mecca and Medina, sees in the Islamic Republic of Iran a revolutionary Shiite Persian power expanding its reach into the Sunni Arab heartland. Having seen Tehran spread its influence into Iraq, Lebanon, Yemen, and Syria, the Saudis, led by a new and more activist king, are sending a strong message to the world that it will not sit by passively.

The most immediate casualty of intensified Saudi-Iranian tensions will be the recently launched U.S.-led diplomatic effort to end the horrific Syrian war that has already claimed more than 250,000 dead. Iranian forces are fighting and dying in Syria to preserve president Bashar al Assad's regime, while Saudi Arabia is actively backing rebels seeking to topple the dictator. Just getting the Iranian and Saudi foreign ministers into the same room last month was touted as a major accomplishment by Secretary of State John Kerry. While Iran and Saudi Arabia profess a desire to cooperate diplomatically, both countries are now sure to double down their support for the opposing sides in Syria's war. The Syrian opposition, meanwhile, has urged all Arab countries to break relations with Tehran.

A second casualty of Iran's strained relations with Saudi Arabia is likely to be the regional effort to combat the so-called Islamic State, or Daesh, that currently occupies a large swath of territory across Iraq and Syria. While the United States and Europe, reeling from Islamist terrorism, see defeating Daesh as the paramount objective in the Middle East, this sense of priority is not shared by many Arab allies within the anti-Daesh coalition. That a number of Gulf states have followed Saudi Arabia's lead and suspended relations with Tehran reflects the fact that they see Shiite Iran, not the Sunni Islamists in Daesh, as their paramount enemy.

In Iraq, efforts to unify the multi-ethnic society and mobilize Sunni tribal forces against Daesh will likely be set back as the region's Sunni-Shiite chasm widens. Tensions have already risen back to the fore in other multi-sectarian countries like Bahrain and Lebanon. And other proxy battles in the region are likely to experience the same polarizing influence. The war in Yemen, where Saudi Arabia has been fiercely battling Iranian-backed Houthi rebels, will likely intensify in the period ahead. This intervention has proven costly in terms of civilian and military casualties, and costs Riyadh close to $1 billion per month.

The situation could even get more heated at home for both countries. Low oil prices, sustained in large part by Riyadh's efforts to deprive Iran of keenly sought after petroleum revenues, is also causing social strains within the Saudi kingdom. Riyadh faces a nearly $100 billion annual budget deficit, forcing the kingdom to cut subsidies and welfare programs, further straining domestic pressures. In nearby Iran, the agreement to suspend its nuclear quest was shaped by the economic pain caused by crippling international sanctions. Yet low oil prices means that the lifting of sanctions may only provide partial and disappointing economic relief to the ailing Iranian economy, which is Riyadh's intent. Rather than moderate their stand-off, both Iran and Saudi Arabia will seek to deflect their respective domestic pressures by stepping up their regional activism against one other.

U.S. led-efforts to negotiate a halt to Iran's nuclear program, however effective, have exacerbated Saudi and other Sunni Arab states' fears that long-standing Western protectors are now moving towards a broader accommodation with Iran. This in turn has fueled current Saudi hostility and bellicosity. Unsure of Washington's ultimate intentions, these Arabs, like Israel, have adopted more strident positions against their Iranian adversary. Administration efforts to then reassure the Arabs have largely fallen on deaf ears. Administration steps to display even-handedness between Iran and Saudi Arabia, rather than reassure the parties, may further estrange and provoke further acts of defiance.

Since the nuclear agreement last July, Iran has continued to challenge the U.S. and the international community, conducting missile tests proscribed by the United Nations Security Council and firing in close proximate to U.S. shipping in the Gulf. Administration efforts to blunt the blow of potential new sanctions against Iran for its behavior-- apparently in an effort not to jeopardize the nuclear agreement–have sewn further confusion about America's future plans.

The Arab backlash over the past few days may have served as a wake up call in Tehran, including among some of its hard-liners, who are now trying to walk back the damage from the Saudi embassy attack. Yet Iran will doubtless still soon continue to test the limits of Sunni Arab and Western resolve across the myriad Middle East battle fields currently under contention. Either by design or through miscalculation, elements in Iran, especially those opposed to the country opening up to the West, could take actions that then trigger retaliatory sanctions or actions that could undermine the prospects of an economic payoff provided by sanctions relief. Uncertainty and unpredictability are the order of the day.

The first few days of 2016 have already proven to be eventful and dangerous on both sides of the Gulf waterway. Cross-straight tensions are sure to intensify in the weeks and months ahead in what is sure to be a tumultuous year of instability and unrest in the Middle East.

Robert M. Danin is a senior fellow at the Council on Foreign Relations and at Harvard University's Belfer Center. He previously served in a variety of senior Middle East positions at the White House and U.S. Department of State.

]]>http://fortune.com/2016/01/06/saudi-arabia-iran-sheikh-nimr-al-nimr/feed/0Protest in Tehran against execution of Shiite clericnt2192Here’s Why Saudi Arabia and Iran Are at Each Other’s Throatshttp://fortune.com/2016/01/04/saudi-arabia-iran-conflict-oil-prices/
http://fortune.com/2016/01/04/saudi-arabia-iran-conflict-oil-prices/#respondMon, 04 Jan 2016 19:27:53 +0000http://fortune.com/?p=1502078]]>It’s not been a great start to 2016. Saudi Arabia has cut diplomatic ties with Iran after its embassy in Tehran was torched by protesters over the weekend. Iran’s Supreme Leader, Ayatollah Ali Khamenei, has promised “divine vengeance” on the Desert Kingdom, prompting fears that a decade-long Cold War may suddenly get a lot hotter. Here’s a quick explainer of what’s happened so far, and what could still happen.

Q. What happened while I was still celebrating New Year’s?

A. Saudi Arabia executed 47 people for either committing or conspiring to commit terrorist attacks. According to various reports, most of the victims were loyal, or sympathetic, to Al Qaeda. But they also included Sheikh Nimr al-Nimr, a prominent cleric from Saudi Arabia’s Shia minority. That caused a wave of protests, both in Iran and among Shia communities in Arab countries, culminating in the attack on the Saudi embassy.

Q. But it didn’t come out of nowhere, did it?

A. Far from it. Saudi and Iran are the two biggest powers in the Middle East, facing off against each other through proxies in at least three conflicts right now: in civil wars in Yemen, Syria, and Iraq, Saudi is backing (mainly Sunni) rebels against non-Sunni governments (Shia in Iraq and Yemen, Alawite in Syria), which are supported to various degrees by Iran. It’s an indication of Saudi’s priorities that it stopped bombing Islamic State positions in Iraq three months ago to concentrate on bombing Yemeni rebels (with substantial civilian casualties).

Q. So, is this about religion or politics, and who’s winning?

A. As Fawaz Gerges, a professor of international relations and Middle Eastern policy at the London School of Economics, puts it, it is “a fight for political supremacy,” of which the traditional rivalry between the Sunni and Shia branches of Islam are only one element. Gerges says Iran has had the upper hand in recent years, ending its international isolation over its nuclear program, buttressing its long-time government allies in Syria, and generally exploiting the grievances of Shia Arabs in places such as Yemen and Bahrain to chip away at Saudi power.

The rivalry has turned increasingly hostile since Saddam Hussein was toppled from power in Iraq (which borders both countries), paving the way for that country’s Shia majority to take power there. It got a lot more hostile in the last 12 months under the influence of Saudi Arabia’s new king, Salman, who has been much more aggressive in trying to stop Iranian influence from spreading.

Q. Is Saudi’s oil price war part of its strategy?

A. When Saudi Arabia stopped cooperating with the rest of OPEC in 2014 to support oil prices, it had other targets in mind, notably higher-cost producers in the U.S. But low oil prices has the bonus effect of punishing both Iran and (non-OPEC) Russia for thwarting its efforts to topple President Bashar al-Assad in Syria. For the moment, Saudi has deep enough pockets to survive the hit to its own finances. But as Emad Mostaque, a strategist with the London-based research consultancy Ecstrat, says, Iran is better equipped to cope with the long-term upheaval because it is less dependent on oil than Saudi Arabia, having raised more through general taxation than through oil duties last year.

Q. Will oil prices spike if the tensions worsen?

A. Maybe. It’s important to distinguish between the actual balance of supply and demand in the oil market, and the geopolitical risk premium that traders build in to oil prices. The first impact on prices is likely to come through the latter channel. Everyone is so bearish about oil in general at the moment, says Mostaque, that there’s no geopolitical risk component in the price at all (crude prices have already given up three-quarters of their gains since the Saudi embassy went up in flames).

Q. Is that it? Just an abstract “risk premium”?

A. In the short term, yes, although it would be unwise to underestimate that. Oil traders are a jumpy lot (especially if they work for strategically important trading houses in big oil importer countries like China or Japan), and things could change quickly if there’s further escalation in the tensions between Saudi Arabia and Iran.

But fundamentally, the oil market is badly oversupplied. While such imbalances invariably correct themselves as demand responds and expensive production is curtailed, the process takes time. To achieve a real, sustained lift to oil prices, you need a real, sustained disruption to supply (preferably in conjunction with a revival in demand). That could happen in the form of a stand-off in the Persian Gulf, through which around 20% of the world’s oil supplies flow.

But an outright interstate conflict isn’t the most likely course of events, experts say. Jane Kinninmont, deputy head of the Middle East and North Africa program at the Royal Institute for International Affairs in London, reckons that an extension of the proxy conflicts between Saudi Arabia and Iran is more likely. If Saudi’s focus falls on Yemen, or Lebanon, as some fear, then there’ll still be no big hit to output. Destabilizing Iraq, which raised oil production more than any other single country last year, would have a much bigger impact on oil prices (albeit at the price of angering the U.S., the Kingdom’s most important ally).

]]>http://fortune.com/2016/01/04/saudi-arabia-iran-conflict-oil-prices/feed/0OPEC Heads of State Gather In Saudi ArabiageoffreytsmithWorld Stock Markets Reel From China, Saudi Shockshttp://fortune.com/2016/01/04/world-stock-markets-reel-from-china-saudi-shocks/
http://fortune.com/2016/01/04/world-stock-markets-reel-from-china-saudi-shocks/#respondMon, 04 Jan 2016 10:50:10 +0000http://fortune.com/?p=1501914]]>Global stock markets have opened 2016 with a bang–just not the kind most were hoping for.

The only color on the screens (unless you’re an oil or gold trader) is red, as markets tumble from Shanghai to London on a cocktail of conflict in the Middle East and fresh evidence of a slowdown in China. The only difference is in how much each market has fallen.

With tensions between Saudi Arabia and Iran driving oil prices temporarily above $38 a barrel for the first time in 10 days, the worst performing markets were those which depend both on a strong Chinese economy and on imported oil: Japan and Germany both lost over 3%, while India and South Korea lost 2.2%.

In Shanghai, trading was halted with the main index down 6.9%, bringing back memories of the panic selling last summer as a government-sponsored bubble exploded. The selling came as a closely-watched survey of business confidence showed further job-shedding by Chinese manufacturers against a background of falling export demand and, more worryingly, weak demand at home: the Caixin/Markit purchasing managers’ index fell to 48.2 from 48.6 in December, well short of expectations of a modest rise. An index level of 50 generally reflects constant levels of output.

Slowing growth in the world’s second-largest economy plagued stock markets all through last year, and international fears were made worse by the extreme volatility in China’s stock market, and by suspicions that Beijing may be hiding the true extent of its slowdown. Doubts over the reliability of official data make private surveys such as the Caixin/Markit one a particularly important gauge of what’s going on.

A fresh disappointment was the last thing stocks needed after a weekend full of alarming news from the Middle East. But there was at least some sign that the drop was driven by factors less related to the news than to technical, one-off factors. A ban on share sales by major shareholders, introduced to stop the collapse of a market bubble last summer, expires on Friday. Traders were said to be anticipating the end of that ban.

On the other hand, there was also evidence of a resumption of one of last year’s key market trends–the flight of capital from China. The yuan fell to 6.356 against the dollar–its lowest level since March 2011–as the People’s Bank of China made good on its intention to allow more flexibility in the exchange rate.

In Europe, the monthly PMIs from Markit had been around or even a little above expectations, but that didn’t stop a rout that already appeared likely over the weekend against a backdrop of rising tensions in the Middle East. Saudi Arabia cut diplomatic ties with Iran, the region’s other big power, on Sunday after its embassy in Teheran was firebombed in protests against a mass execution of political dissidents in Saudi Arabia, including a prominent Shia cleric.

]]>http://fortune.com/2016/01/04/world-stock-markets-reel-from-china-saudi-shocks/feed/0rsz_china_economygeoffreytsmithDonald Trump Lost All of These Business Deals Since Junehttp://fortune.com/2015/12/17/donald-trump-deals-lost/
http://fortune.com/2015/12/17/donald-trump-deals-lost/#respondThu, 17 Dec 2015 12:00:23 +0000http://fortune.com/?p=1485149]]>The final Republican presidential debate of 2015 was held last night at the Venetian Hotel and Casino in Las Vegas. Despite the best efforts of former Florida Governor Jeb Bush and others, no one was able to mortally wound the ascendant candidacy of Donald Trump.

Trump launched his bid to win the Republican nomination for the presidency in June 2015, and immediately embarked on a berserker-mode political campaign, in which he's made provocative statements about Muslims, Mexicans, women and the Chinese.

None of these statements have had any ill effect on his standing in the polls. In fact, Trump's lead over his rivals has only grown. This flies in the face of conventional wisdom, which holds that his statements should have destroyed his candidacy faster than a tweet from Anthony Weiner.

While he may not have lost any of his political supporters, some of his rhetoric has caused at least some of his business efforts to suffer, and it remains to be seen whether Trump can undo the damage when the smoke clears. Fortune takes a look at some of the business deals that have taken a hit since Donald Trump announced his candidacy.

Univision deal

When Donald Trump declared his candidacy for the presidency on June 15, he made a statement about Mexican immigrants that immediately set the tone for his entire campaign.

"When Mexico sends its people, they’re not sending their best," he said. "They’re sending people that have lots of problems, and they’re bringing those problems with us. They’re bringing drugs. They’re bringing crime. They’re rapists."

Univision, the largest Spanish-language television broadcaster in the United States, announced that in response to these comments, it would not air the 2015 Miss USA Pageant. Furthermore, it would sever ties with Miss Universe Organization co-owner Donald Trump.

"At Univision, we see first-hand the work ethic, love for family, strong religious values and the important role Mexican immigrants and Mexican-Americans have had and will continue to have in building the future of our country," the company said in a press release. Trump responded by suing the network, seeking damages in excess of $500 million.

NBC deal

The fallout for the 2015 Miss USA Pageant didn't end with Univision. On June 29, NBC cut ties with Trump and canceled plans to air both the Miss USA Pageant and the Miss Universe Pageant, both joint ventures with the real estate mogul. It didn't stop there either - NBC also nixed any future involvement with Trump's reality show, "The Celebrity Apprentice."

NBC cited his statement about Mexican immigrants as its reason for ending its relationship with Trump. The network was also the subject of a Change.org petition with over 200,000 signatures, calling for it to cancel all three shows. Ultimately, the Reelz digital cable network carried the Miss USA broadcast.

Macy's deal

Just two days after Univision and NBC cut ties with Donald Trump, Macy's m announced that it would discontinue its Donald Trump line of menswear in response to his comments. Macy's had carried the clothing line since 2004, and Trump had appeared in television advertisements for the store.

"We are disappointed and distressed by recent remarks about immigrants from Mexico," the store said. "Macy's is a company that stands for diversity and inclusion."

Trump responded with his opinion about why the companies had deemed his services surplus to requirements.

"Clearly, NBC nbc and Macy's support illegal immigration," he said. "Both Macy's and NBC totally caved at the first sight of potential difficulty with special interest groups."

Dubai deal

You may not have heard of the retailer called Lifestyle lfsyf, but millions of Muslims in the Middle East, North Africa and elsewhere certainly have. On December 9, hot on the heels of his proposal to ban all Muslim immigration into the United States, CNN reported that the Dubai-based retailer had announced a ban on all of the Trump-branded home d?cor products in all 195 of its stores.

“In light of the recent statements made by the presidential candidate in the U.S. media, we have suspended sale of all products from the Trump Home d?cor range,” Lifestyle CEO Sachin Mundhwa said. He wasn't alone.

“I think he damaged all his brand in all the Muslim countries," said Khalaf Al-Habtoor, Dubai real estate tycoon and chairman of the Al Habtoor Group if the United Arab Emirates.

"He insulted 1.8 billion Muslims worldwide, and he has business in the Arab world," al-Habtoor told The New York Times. "[R]espectable Muslims will refuse to work with him.”

Turnberry deal

Donald Trump is an avid golfer, and when he bought the legendary Scottish golf course known as Turnberry in 2014 for a rumored $60 million, he did so with the highest of hopes, that in 2020 the course would host the Open Championship. Also known as the Open and the British Open, it all means one thing - one of the major championships in professional golf, and a coup for any course that hosts it.

Until very recently, those with the inside track had said that the Royal and Ancient Golf Club of St. Andrews, the sport's governing authority outside of the U.S., would probably hold the 2020 tournament at Trump Turnberry. However, after he had some harsh words for Muslims, Mexicans, women and China, The Independent on Sunday reported that he could now kiss those dreams goodbye, as one does an errant golf ball that disappears into the horizon.

"One word was thrown around: Enough," said an anonymous source close to the championship committee who was quoted by The Independent. The publication also quoted another anonymous insider, who said bluntly, "2020 will not happen here."

Trump's efforts on the links were dealt another blow when the Scottish government approved the construction of wind turbines just two miles from the Trump International Golf Links resort, despite the facility's attempt to block it. According to Bloomberg News, Trump said that the turbines would ruin the view, and the Trump Organization blasted the court's decision in a statement.

“History will judge those involved unfavorably and the outcome demonstrates the foolish, small-minded and parochial mentality which dominates the current Scottish government's dangerous experiment with wind energy,” it said.